Are you ready for an audit or investigation in China?

The following steps are ones you should take now in order to prepare your business to handle a customs audit and investigation when it happens.

Preparation

It is estimated that you should expect a customs audit or investigation of some kind for every five years in business. The most obvious step is to ensure your customs affairs are totally in order, which is not an easy or short-term task. You should employ suitably qualified legal professionals to help you establish a customs and trade compliance policy and programme, and to keep track of customs and trade compliance reviews. In particular, you should establish a process of how to respond to a government auditor or investigation (and who should do it), and internal training must be conducted. While it might be tempting to cut costs and conduct an annual overview and sample audit yourself, it is a good investment to employ external legal professionals to ensure you stay within the law.

Ensure your team is aware the business is being investigated and that it is a routine event for which you are prepared. There is nothing more worrying than seeing the boss stressed while a stranger roots through the paperwork. It is also worth telling your staff that if the auditors or investigators ask them any questions, they should only answer truthfully those they can answer. They should direct other questions to the corporate counsel rather than attempt to answer them in an inaccurate way.

First response

The first you may know about an audit or investigation is when Customs phone to schedule a time for the auditor or investigator to visit and interview your employees and look at your books. If you need time to get your internal information and clearance, then politely ask them to contact the right corporate counsel or offer some alternative dates. You should schedule a date only after all members of staff are legally trained and counsel is available to attend, if possible.

Mistakes in customs and trade transactions

In the vast number of customs and trade transactions and filing of information, mistakes always occur. But even innocent mistakes can be viewed badly by auditors and investigators, so you must take professional advice immediately to work out the best course of action. The best option is that you seek advice from those law firms that have specialised lawyers in assisting businesses in disclosing mistakes while reducing liability.

Protection of legal rights

While you certainly need to co-operate with government auditors and investigators, you do not have an obligation to turn over all information to the government nor self incriminate. Strategies and actions should be taken to protect the personnel and property of the business based on legal rights and procedures.

Legal analysis

It is critical for you or your representative to take careful notes of what is said by auditors or investigators. And you can retrieve their past interpretations in writing, which will help you to see how they apply their rulings and deal with challenges. All of this information is very important in order for you to do a legal analysis of the conclusion based on fact-findings, debates and arguments.

Public relation and crisis management campaign

As long as you use quality professional advice, keep sound customs and trade compliance programmes, and deal with any audits and investigations promptly and professionally, you will deserve a fair result based on legal rules and regulations. And you also have rights, including the right of appeal. In some circumstances, you may also want to use public relations and crisis management campaigns. But you must use them very delicately as these audits or investigations mainly involve factual and legal issues as opposed to political issues.